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Cargill's Problems With Palm Oil

Executive Summary

U.S. agribusiness giant Cargill plays a leading role in the global palm oil market. The largest importer of palm oil into the U.S., Cargill has a two-part business model in the palm oil industry: it both owns and operates palm oil plantations in Indonesia and it purchases and trades palm oil and its derivatives worldwide.

This report presents evidence that Cargill is operating two undisclosed palm oil plantations in West Kalimantan, Indonesia. Operations at these plantations are actively burning and clearing rainforests, causing conflict with local communities, destroying peatlands and operating in violation of the Roundtable on Sustainable Palm Oil’s (RSPO) Principles and Criteria and outside of Indonesian law. It also finds that Cargill has failed to adopt and implement systematic safeguards in its production, purchasing and trading of palm oil from other suppliers.

Cargill’s palm oil commitmentsCargill became a member of the RSPO, a voluntary standard for palm oil production, in 2004. As a certified member of the RSPO, Cargill is publicly asserting that the palm oil it produces and trades adheres to industry best practices and RSPO Principles and Criteria. 2 Investigation of the reality on the ground, however, reveals a wide gulf between Cargill’s palm oil operations and its stated commitments and responsibilities under the RSPO.

RSPO Violations This investigation presents evidence that Cargill is violating at least five RSPO criteria:

Operating outside of Indonesian law;

failing to disclose ownership of palm oil plantations;

clearing rainforests without permits;

failing to resolve ongoing and large-scale land conflicts; and »

destroying watersheds.

Indonesian Law Violations This investigation presents evidence that Cargill is violating at least five RSPO criteria:

Operating without an Environmental Assessment Report or Business Permits;

clearing rainforest without Timber Cutting Permits;

exceeding the maximum allowed concession area;

clearing peatlands; and

using fire/burning in palm oil concessions.

Systemic failures in Cargill’s supply chainThis report also finds that Cargill is not exercising necessary oversight of its own supply chain to ensure that it is clear from controversy. Cargill is regularly purchasing from and trading with at least two controversial palm oil suppliers, SALCRA and Sinar Mas Group, that are actively destroying rainforests, violating human rights and operating outside of industry best practices and/or national laws.

Recommendations and ConclusionsBold action by Cargill, the most influential palm oil producer and trader in the U.S., to reduce the negative impacts of its palm oil operations could establish an important precedent for agribusiness throughout the world.

Based on the findings of our investigation, RAN recommends that:

Cargill adopt and implement a comprehensive palm oil policy that includes commitments to ensure socially and environmentally responsible palm oil production on their plantations and supplier plantations in line with RSPO Principles and Criteria and Indonesian law.

Cargill support a moratorium on natural forest conversion and peat land draining throughout their supply chain.

The RSPO immediately investigate Cargill’s violations under the RSPO P&C and take appropriate disciplinary action.

The RSPO immediately investigate and take action on existing complaints against problematic companies such as SALCRA and Sinar Mas, and implement an immediate moratorium on peatland conversion.

Cargill customers, such as General Mills, investigate their own supply chains, and cancel contracts with problematic suppliers, including Cargill and Sinar Mas Group.

The Indonesian government should investigate the legality of Cargill’s CTP Holdings plantations in West Kalimantan and take appropriate action based on their findings.

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After fighting for the return of their ancestral lands for more than a decade, the people of Long Teran Kenan in Malaysian Borneo took a stand earlier this year and reclaimed part of their homeland with a decisive and peaceful act of collective resistance. Their territory had been taken from them and converted into oil palm plantations, which are now owned by the notorious global palm oil giant IOI Group.